Existing home sales see largest gain in years

Source: MSNBC

WASHINGTON - A real estate trade group says sales of existing homes rose by the largest amount in more than five years in September. The data is a possible glimmer of hope that the housing slump could be starting to bottom out.

The National Association of Realtors said Friday that sales of existing homes rose by 5.5 percent in September compared to August, the best showing since a 5.6 percent increase in July 2003, during the five-year housing boom.

Even with the gain in sales, prices kept falling. The median sales price has dropped to $191,600, down by 9 percent from a year ago.

Read more: http://www.msnbc.msn.com/id/27359725/

I will guess it's a good chunk of the increase, as has been reported in California.

...Of the homes that resold in September, 51.1 percent were foreclosure resales, meaning they had been foreclosed on at some point in the prior 12 months. That's up from 46.9 percent in August and 12.6 percent in September 2007....

http://www.dqnews.com/News/California/RRCA081022.aspx

Housing prices are still too high. Having someone lose out on a foreclosure sale means that someone else gets a property for a more reasonable price.

A quick example:

A friend of mine just bought a house in San Diego for $160,000. The previous human owner had paid $154,000 for it in early 2001, and apparently leveraged himself on equity to a point where he couldn't make the payments. The foreclosure hammer came down in July 2007.

The receiver was AIG, the big insurance company that made the news recently by going down in flames. AIG transferred the property to its troubled asset disposal unit for $280,000. So AIG lost at least (and probably quite a bit more than) $120,000.

Net result:

A) My dear friend the middle-aged, middle school teacher now owns his first home, and other than a $5,000 roofing job which he has already arranged he is set for a long time with payments he can handle; and

B) Home prices in his neighborhood have been pulled back toward sanity.

C) A nice house that has been sitting vacant for over a year now has a responsible, kind, generous, liberal Democrat living in it. His mere presence will improve quality of life in the area (and I mean that seriously).

I don't know what happened to the previous owner, but he had no family to support and I presume he is renting somewhere.

but when his neighbors need to refinance their adjustable rate mortgage, the appraiser is going to see your friend's house sale show up in the comparables. They'll realize they're underwater, and might just turn over the keys to the lender themselves. If that lender has to take a bath on the house, it might be even bigger.

If the neighbor's house sells for say, $130,000, then your friend will be underwater, as well. It's a vicious cycle.

I agree that the readjustment needs to happen, but only the folks who get in at the very bottom are the winners. And we have no idea when that is until we see it in the rear view mirror.

I checked into public records (which my job gives me easy, free access to). They have a very small residual principle balance on a fixed rate loan, and no HELOC.

There are a lot of improvements on the house, and unless they have some source of great wealth (which I doubt), they paid for it all the old-fashioned way. The term used in the past was "sweat equity", which is how I manage my own home finances.

People who didn't buy when prices were too high, who have managed their finances responsibly and live in their homes for the long term, are not harmed by falling values.

I agree that the readjustment needs to happen, but only the folks who get in at the very bottom are the winners.

Think about the other side of that coin - The losers are mainly the last ones to sign on to the Ponzi scheme. Most people don't fall into either of those categories.

possibly, but to the new property owners, it is an investment which, in the long run, will be beneficial.

eom

Then the local government gave special incentives so teachers, firemen and policement could buy in the area. Previously they couldn't afford to.

dp

.... that has not been in the stock market.

sure - great news

this is not all cloud - there's a bit of silver lining, too.

That's how the market heals itself when housing prices have gotten too high.

BREAKING NEWS

updated 9 minutes ago
WASHINGTON - A real estate trade group says sales of existing homes rose by the largest amount in more than five years in September. The data is a possible glimmer of hope that the housing slump could be starting to bottom out.

The National Association of Realtors said Friday that sales of existing homes rose by 5.5 percent in September compared to August, the best showing since a 5.6 percent increase in July 2003, during the five-year housing boom.

Even with the gain in sales, prices kept falling. The median sales price has dropped to $191,600, down by 9 percent from a year ago.

http://tinyurl.com/677bqk

the nouse next door to me just sold. 4 BR 3 Bath with Pool. Was listed 2 years ago at $380K.. sold last week for $125K.

You may have just picked up a nice new neighbor.

which is very good news.

Both for the overall economy and the quality of life in their neighborhoods.

Not to cast asparagus on renters, but in general people take better care of homes they live in.

I thought there was a "credit freeze" going on???? Look at the homeless rates shooting up to all time highs...

I believe mccollier's reply was misplaced.

I wouldn't believe it. They are professional liars who were a major factor in pumping hot air into the bubble in the first place.

Most of the big analysts agree that there are some quirky aspects to the September figures, but the numbers are accurate.

I have massive skepticism about a group who officially calls tiny, "cozy".

What I find believable are statistics compiled from actual recordings of sales that happen in the county deed recorder's office, they reflect completed transactions, not just good intentions of people who have written up offers, but have no chance of getting financing in today's tight credit markets.

I spent over two decades in the title insurance business, and I've seen enough bullshit from realty people to automatically question everything they say.

http://www.dqnews.com

"HOME SALES TUMBLED IN SEPT posting one of their largest one month drops in a year, down 9.6%. Today’s NAR Existing Home Sales numbers released showing sales up 5.1% were ANNUALIZED, which is not how you have to look at this dynamic market.

Month over month reflects the truth about this market. Sept 07 was before the ‘new normal’, before a price crash of up to 70% in some areas and before it was apparent that we now live in a 20% down, 30-yr and 15-yr fixed mortgage world. The past two months are highly troubling and a leading indicator of more downward pressure this Winter. Indicators in the past week of housing reports scream that the housing market is locked up at present and so are all of those home owners who want or have to sell their home.

Look below at NAR’s chart. In reality, home sales FELL considerably from August, down 9.6%. Prices fell as well, putting millions of home owners into a negative equity or deeper negative equity position, exponentially increasing their likelihood of loan default."

From Imploded Mortgage. The site that knew this was coming before anyone had a clue.